Stanford Graduate School of Business video above published Oct 9, 2017: Stephan Seiler, Associate Professor of Marketing, Stanford Graduate School of Business
YouTube.com auto-generated transcript (w/ minor edits):
00:00 [Music]
00:18 off-line compared to online retail is
00:20 still actually a very large fraction of
00:22 consumer spending so although online is
00:24 growing quite dramatically as of now
00:27 essentially still about 90 percent of
00:29 total retail spending happens in the
00:31 offline world and firms are still trying
00:33 to figure out how to best promote
00:35 products how to best run a price
00:37 promotions things of that sort and so we
00:40 wanted to go back and see can we
00:42 actually use tools that we learned about
00:45 it in the online world better types of
00:47 measurement and can we bring that back
00:48 through your flying world and try to
00:50 track things better so we know if I run
00:57 an ad online
00:58 I typically can track did somebody click
01:00 on it did it again to go to my website
01:01 how much they spend all this linkage is
01:04 much closer and those are often things
01:06 that we don't observe in the offline
01:07 world right so an online retailer would
01:09 know how did this consumer get to the
01:12 product you're ultimately purchased we
01:13 can observe browsing with a lot of
01:15 precision. Offline does usually no
01:17 equivalent traditionally we weren't able
01:18 to see how did somebody walk through the
01:20 store how did they actually get to the
01:22 specific aisle where they then picked up
01:23 products and so what we do in the study
01:26 is we actually bring in a new
01:28 measurement tool that's going to mimic
01:30 the way we're gonna observe things
01:31 online in the offline world and in
01:33 particular what we're going to do is
01:34 we're gonna rig consumer shopping carts
01:37 if you will with so-called radio
01:38 frequency identification tags which
01:40 worked like a GPS tracker that allow us
01:42 to track exactly how does somebody walk
01:44 through the store which category is
01:46 godigo? do they walk past what do they
01:48 eventually end up purchasing
01:50 [Music]
01:54 if in a particular week the supermarket
01:57 is running a beer ad do more people buy
02:00 a beer
02:00 that we were usually able to observe
02:02 even before but now we can also see did
02:04 actually more people go to the beer
02:06 aisle so did did that advertising
02:09 attract people to go to different part
02:11 was started they wouldn't have otherwise
02:12 gone to and then they made the purchase
02:14 if that's true then maybe this
02:16 advertising will have positive spillover
02:18 to other categories maybe people on
02:20 their way to the beer aisle are now
02:21 gonna pick up salty snacks other things
02:24 and so there's sort of anecdotally a lot
02:26 of that sense that we are gonna get
02:29 these kind of spillover effect so people
02:31 often talk about the fact that milk gets
02:33 stored in the back of the store
02:34 why because people buy it very
02:36 frequently and having it in the back of
02:38 the store makes them walk past a lot of
02:40 other categories and hence they might
02:42 pick up other things that they didn't
02:43 plan on buying on their way and so you
02:46 could imagine that advertising does
02:48 something very similar if advertising
02:49 allows me to divert traffic to other
02:51 parts of the store then maybe products I
02:54 pass on that way also gonna end up in my
02:56 purchase basket and so that was
02:59 something that we weren't usually able
03:00 to observe
03:01 [Music]
03:05 so for a store manager the good news
03:08 here is that advertising is quite
03:10 effective beyond just individual product
03:12 being advertised so what we find is that
03:14 when you advertise a particular brand of
03:16 beer sales go up in the beer category as
03:18 a whole and that increase comes partly
03:20 from the advertised brands but also goes
03:22 beyond that
03:23 so some consumers presumably just pick
03:26 up on effect beers being advertised
03:27 today they got reminded of I want to buy
03:30 beer and hence we seen increase in beer
03:31 sales and that's beyond the individual
03:34 product being advertised at the same
03:36 time we also find that the effect stops
03:38 there so to the extent that stores might
03:40 have to hope that driving more people to
03:43 the beer aisle through advertising will
03:45 then spill over into higher sales for
03:46 salty snacks or other categories that
03:49 are stocked nearby we find no evidence
03:51 for that whatsoever so we think so
03:53 things stop at the category level but
03:56 they go beyond individual product being
03:57 advertised and so hence as we think
04:00 about allocating advertising budget
04:02 thinking about effectiveness at the
04:04 level of the category rather than the
04:06 more narrow product level or the broader
04:08 store level seems to be the right way to
04:09 tackle that managerial decision
04:12 [Music]
